Finance Bill (HC Bill 116)

(ii) are effected by taking only ordinary commercial steps in
accordance with a generally prevailing commercial practice.

(7) This paragraph is to be read as if it formed part of section 461.

Commencement of orders or regulations containing consequential provision

35 (1) 5This paragraph applies in relation to any order or regulations made before 1
April 2018 by the Treasury or Commissioners containing provision that is
consequential on provision made by this Schedule.

(2) Any order or regulations to which this paragraph applies may contain
provision (however expressed) for securing that the consequential provision
10made by the order or regulations has effect in accordance with paragraph 25
(commencement) as if the consequential provision were included in the
corporate interest restriction amendments mentioned in that paragraph.

Interpretation

36 References in this Part of this Schedule to Part 10 of TIOPA 2010 are to Part
1510 of that Act as inserted by Parts 1 and 2 of this Schedule.

SCHEDULE 6 Section 21 Relief for production of museum and gallery exhibitions

Part 1 Amendment of CTA 2009

1 20After Part 15D of CTA 2009 insert—

““Part 15E

Museums and galleries exhibition tax relief

CHAPTER 1 Introduction

Overview

1218ZA 25Overview

(1) This Part is about the production of museum and gallery exhibitions,
and applies for corporation tax purposes.

(2) This Chapter explains what is meant by “exhibition” and “touring
30exhibition” and how a company comes to be treated as the primary
production company or a secondary production company for an
exhibition.

(3) Chapter 2 is about the taxation of the activities of a production
company and includes—

(a) provision for the company’s activities in relation to its
exhibition to be treated as a separate trade, and

(b) provision about the calculation of the profits and losses of
that trade.

(4) 5Chapter 3 is about relief (called “museums and galleries exhibition
tax relief”) which may be given to a production company in relation
to an exhibition—

(a) by way of additional deductions to be made in calculating the
profits or losses of the company’s separate trade, or

(b) 10by way of a payment (a “museums and galleries exhibition
tax credit”) to be made on the company’s surrender of losses
from that trade,

and describes the conditions a company must meet to qualify for
museums and galleries exhibition tax relief.

(5) 15Chapter 4 contains provision about the use of losses of the separate
trade (including provision about relief for terminal losses).

(6) Chapter 5 provides—

(a) for relief under Chapters 3 and 4 to be given on a provisional
basis, and

(b) 20for such relief to be withdrawn if it turns out that conditions
that must be met for such relief to be given are not actually
met.

Interpretation

1218ZAA “Exhibition”

(1) 25In this Part “exhibition” means a curated public display of an
organised collection of objects or works (or of a single object or work)
considered to be of scientific, historic, artistic or cultural interest.

(2) But a display is not an exhibition if—

(a) it is organised in connection with a competition of any kind,

(b) 30its main purpose, or one of its main purposes, is to sell
anything displayed or to advertise or promote any goods or
services,

(c) it includes a live performance by any person,

(d) anything displayed is for sale, or

(e) 35anything displayed is alive.

(3) Subsection (2) does not prevent a display being an exhibition if it
includes a live performance by a person which is merely incidental
to, or forms a merely incidental part of, the collection displayed.

(4) A display is “public” if the general public is admitted to it, whether
40or not the public is charged for admission.

(5) A display does not fall outside subsection (4) just because visitors
other than the general public are admitted to it for a single session or
a small number of sessions.

1218ZAB “Touring exhibition”

(1) In this Part an exhibition is a “touring exhibition” if conditions A to
E are met.

(2) Condition A is that—

(a) 5there is a primary production company for the exhibition (see
section 1218ZAC), and

(b) the primary production company is within the charge to
corporation tax.

(3) Condition B is that the primary production company intends, when
10planning the exhibition, that conditions C, D and E should be met in
relation to it.

(4) Condition C is that the exhibition is held at two or more venues.

(5) Condition D is that at least 25% of the objects or works displayed at
the first venue at which the exhibition is held are also displayed at
15every subsequent venue at which the exhibition is held.

(6) Condition E is that the period between the deinstalling of the
exhibition at one venue and the installation of the exhibition at the
next venue does not exceed 6 months.

1218ZAC Primary production company

(1) 20In this Part a company is the primary production company for an
exhibition if the company (acting otherwise than in partnership)
meets conditions A and B.

(2) Condition A is that the company—

(a) makes an effective creative, technical or artistic contribution
25to the exhibition, and

(b) directly negotiates for, contracts for and pays for rights,
goods and services in relation to the exhibition.

(3) Condition B is that—

(a) where the exhibition is held at just one venue, the company is
30responsible for the production of the exhibition at that venue;

(b) where the exhibition is held at two or more venues, the
company is responsible for the production of the exhibition at
(at least) the first of those venues.

(4) For the purposes of this section and section 1218ZAD, a company is
35responsible for the production of the exhibition at a venue if—

(a) it is responsible for producing and running the exhibition at
the venue,

(b) where the exhibition is at the venue for a limited time, it is
responsible for deinstalling and closing the exhibition at the
40venue, and

(c) it is actively engaged in decision-making in relation to the
exhibition at the venue.

(5) If more than one company meets conditions A and B in relation to the
production of the exhibition, the company that most directly meets
45those conditions is the primary production company for the
exhibition.

(6) If no company meets conditions A and B in relation to the production
of the exhibition, there is no primary production company for the
exhibition.

1218ZAD Secondary production company

(1) 5If an exhibition is held at two or more venues, there may be one or
more secondary production companies for the exhibition.

(2) In this Part a company is the secondary production company for an
exhibition at a venue if the company meets conditions C and D.

(3) Condition C is that the company (acting otherwise than in
10partnership) is responsible for the production of the exhibition at the
venue.

(4) Condition D is that the company is not the primary production
company.

(5) If more than one company meets conditions C and D in relation to
15the production of the exhibition at the venue, the company that is
most directly responsible for the production of the exhibition at the
venue is the secondary production company for the exhibition at the
venue.

(6) If no company meets conditions C and D in relation to the
20production of the exhibition at the venue, there is no secondary
production company for the exhibition at the venue.

CHAPTER 2 Taxation of activities of production company

Separate exhibition trade

1218ZB Separate exhibition trade

(1) 25Subsection (2) applies to a company in relation to an exhibition if,
and only for so long as, the company qualifies for museums and
galleries exhibition tax relief in relation to the production of the
exhibition (see section 1218ZCA).

(2) The company’s activities in relation to the production of the
30exhibition are treated as a trade separate from any other activities of
the company (including activities in relation to the production of any
other exhibition).

(3) In this Part the separate trade mentioned in subsection (2) is called
“the separate exhibition trade”.

(4) 35Subsections (5) and (6) apply where the company is the primary
production company for the exhibition.

(5) The company is treated as beginning to carry on the separate
exhibition trade—

(a) at the beginning of the production stage of the exhibition at
40the first venue at which it is held, or

(b) if earlier, at the time of the first receipt by the company of any
income from the production of the exhibition.

(6) The company is treated as ceasing to carry on the separate trade
when the exhibition closes at the last venue at which it is held.

(7) 5Subsections (8) and (9) apply where the company is a secondary
production company for the exhibition.

(8) The company is treated as beginning to carry on the separate
exhibition trade—

(a) at the beginning of the production stage of the exhibition at
10the first venue for which the company is the secondary
production company, or

(b) if earlier, at the time of the first receipt by the company of any
income from the production of the exhibition.

(9) The company is treated as ceasing to carry on the separate trade
15when the exhibition closes at the last venue for which the company
is the secondary production company.

Profits and losses of separate exhibition trade

1218ZBA Calculation of profits or losses of separate exhibition trade

(1) This section applies for the purpose of calculating the profits or
20losses of the separate exhibition trade.

(2) For the first period of account during which the separate exhibition
trade is carried on, the following are brought into account—

(a) as a debit, the costs of the production of the exhibition
incurred to date;

(b) 25as a credit, the proportion of the estimated total income from
that production treated as earned at the end of that period.

(3) For subsequent periods of account the following are brought into
account—

(a) as a debit, the difference between the amount (“C”) of the
30costs of the production of the exhibition incurred to date and
the amount corresponding to C for the previous period, and

(b) as a credit, the difference between the proportion (“PI”) of the
estimated total income from that production treated as
earned at the end of that period and the amount
35corresponding to PI for the previous period.

(4) The proportion of the estimated total income treated as earned at the
end of a period of account is—

1218ZBB Income from the production

(1) References in this Chapter to income from a production of an
exhibition are to any receipts by the company in connection with the
production or exploitation of the exhibition.

(2) 5This includes—

(a) receipts from the sale of tickets or of rights in the exhibition;

(b) royalties or other payments in connection with the
exploitation of the exhibition or aspects of it (such as a
particular exhibit);

(c) 10payments for rights to produce merchandise;

(d) a grant designated as made for the purposes of the exhibition;

(e) receipts by the company by way of a profit share agreement.

(d)(d)a grant designated as made for the purposes of the exhibition;

(e) receipts by the company by way of a profit share agreement.

1218ZBC Costs of the production

(1) References in this Chapter to the costs of a production of an
15exhibition are to expenditure incurred by the company on—

(a) activities involved in developing, producing, running,
deinstalling and closing the exhibition, or

(b) activities with a view to exploiting the exhibition.

(2) This is subject to any provision of the Corporation Tax Acts
20prohibiting the making of a deduction, or restricting the extent to
which a deduction is allowed, in calculating the profits of a trade.

1218ZBD When costs are taken to be incurred

(1) For the purposes of this Chapter, the costs that have been incurred
on a production of an exhibition at a given time do not include any
25amount that has not been paid unless it is the subject of an
unconditional obligation to pay.

(2) Where an obligation to pay an amount is linked to income being
earned from the production of the exhibition, the obligation is not
treated as having become unconditional unless an appropriate
30amount of income is or has been brought into account under section
1218ZBA.

1218ZBE Pre-trading expenditure

(1) This section applies if, before the company begins to carry on the
separate exhibition trade, it incurs expenditure on activities falling
35within section 1218ZBC(1)(a).

(2) The expenditure may be treated as expenditure of the separate
exhibition trade and as if incurred immediately after the company
begins to carry on that trade.

(3) If expenditure so treated has previously been taken into account for
40other tax purposes, the company must amend any relevant company
tax return accordingly.

(4) Any amendment or assessment necessary to give effect to subsection
(3) may be made despite any limitation on the time within which an
amendment or assessment may normally be made.

1218ZBF Estimates

Estimates for the purposes of section 1218ZBA must be made as at
the balance sheet date for each period of account, on a just and
reasonable basis taking into consideration all relevant circumstances.

5CHAPTER 3 Museums and galleries exhibition tax relief

Introduction

1218ZC Overview of museums and galleries exhibition tax relief

(1) Relief under this Chapter (“museums and galleries exhibition tax
10relief”) is given by way of—

(a) additional deductions (see sections 1218ZCE to 1218ZCG),
and

(b) museums and galleries exhibition tax credits (see sections
1218ZCH to 1218ZCK).

(2) 15See Schedule 18 to FA 1998 (in particular, Part 9D) for provision
about the procedure for making claims for museums and galleries
exhibition tax relief.

Companies qualifying for museums and galleries exhibition tax relief

1218ZCA Companies qualifying for museums and galleries exhibition tax
20relief

(1) A company qualifies for museums and galleries exhibition tax relief
in relation to the production of an exhibition if conditions A to D are
met.

(2) Condition A is that the company is—

(a) 25the primary production company for the exhibition, or

(b) a secondary production company for the exhibition.

(3) Condition B is that the company is—

(a) a charitable company which maintains a museum or gallery,

(b) wholly owned by a charity which maintains a museum or
30gallery, or

(c) wholly owned by a local authority which maintains a
museum or gallery.

See section 1218ZCB for the interpretation of paragraphs (b) and (c).

(4) Condition C is that at the beginning of the planning stage, the
35company intends that the exhibition should be public (within the
meaning given by section 1218ZAA).

(5) Condition D is that the EEA expenditure condition is met (see section
1218ZCC).

(6) For the purposes of subsection (3) “museum or gallery” includes—

(a) 40a library or archive, and

(b) a site where a collection of objects or works (or a single object
or work) considered to be of scientific, historic, artistic or
cultural interest is exhibited outdoors (or partly outdoors).

(7) There is further related provision in section 1218ZCM (tax avoidance
5arrangements).

1218ZCB Interpretation of section 1218ZCA(3)(b) and (c)

(1) For the purposes of section 1218ZCA(3)(b) a company is “wholly
owned by a charity which maintains a museum or gallery” if
condition A or B is met.

(2) 10Condition A is that—

(a) the company has an ordinary share capital, and

(b) every part of that share capital is owned by—

(i) a charity which maintains a museum or gallery, or

(ii) two charities, each of which maintains a museum or
15gallery.

(3) Condition B is that—

(a) the company is limited by guarantee,

(b) there are no more than two beneficiaries of the company, and

(c) the beneficiary, or each beneficiary, is—

(i) 20a charity which maintains a museum or gallery, or

(ii) a company wholly owned by a charity which
maintains a museum or gallery.

(4) For the purposes of section 1218ZCA(3)(c) a company is “wholly
owned by a local authority” if—

(a) 25where the company has an ordinary share capital, every part
of that share capital is owned by the local authority, or

(b) where the company is limited by guarantee, the local
authority is the sole beneficiary of the company.

(5) Ordinary share capital of a company is treated as owned by a charity
30or a local authority if the charity or local authority (as the case may
be)—

(a) directly or indirectly owns that share capital within the
meaning of Chapter 3 of Part 24 of CTA 2010, or

(b) would be taken so to own it if references in that Chapter to a
35body corporate included references to a charity or local
authority which is not a body corporate.

(6) A beneficiary of a company is a person who—

(a) is beneficially entitled to participate in the company’s
divisible profits, or

(b) 40will be beneficially entitled to share in any of the company’s
net assets available for distribution on its winding up.

(7) In this section “museum or gallery” has the same meaning it has for
the purposes of section 1218ZCA.

1218ZCC The EEA expenditure condition

(1) The “EEA expenditure condition” is that at least 25% of the core
expenditure on the production of the exhibition incurred by the
company is EEA expenditure.

(2) 5In this Part “EEA expenditure” means expenditure on goods or
services that are provided from within the European Economic Area.

(3) Any apportionment of expenditure as between EEA and non-EEA
expenditure for the purposes of this Part is to be made on a just and
reasonable basis.

(4) 10The Treasury may by regulations—

(a) amend the percentage specified in subsection (1);

(b) amend subsection (2).

(5) See also sections 1218ZE and 1218ZEA (which are about the giving
of relief provisionally on the basis that the EEA expenditure
15condition will be met).

1218ZCD “Core expenditure”

(1) Subject to the following provisions of this section, in this Part “core
expenditure”, in relation to a company’s production of an exhibition,
means expenditure on the activities involved in producing,
20deinstalling and closing the exhibition at every relevant venue.

(2) For the purposes of subsection (1) a venue is a “relevant venue” in
relation to a company if the company’s activities in relation to the
exhibition at the venue form part of the company’s separate
exhibition trade.

(3) 25Expenditure on the activities involved in deinstalling and closing the
exhibition at a venue is core expenditure only if the period between
the opening and closing of the exhibition at the venue is 12 months
or less.

(4) Expenditure on the storage of exhibits for an exhibition which is held
30at just one venue is not core expenditure.

(5) Where a company incurs expenditure on the storage of exhibits for
an exhibition which is held at two or more venues, the amount of
such expenditure which is core expenditure is limited to the amount
of relevant storage expenditure (if any) incurred by the company in
35respect of a period of 4 months or less.

(6) For the purposes of subsection (5) expenditure in relation to the
exhibition is “relevant storage expenditure” if—

(a) the expenditure is incurred in respect of the storage of
exhibits between the deinstallation of the exhibition at one
40venue and the opening of the exhibition at the next venue,
and

(b) the exhibits are not stored at a venue at which the exhibition
has been held or is to be held.

(7) Expenditure of the following kinds is not core expenditure—

(a) expenditure on any matters not directly involved with
putting on the exhibition (for instance, financing, marketing,
legal services and promotional events),

(b) speculative development expenditure on initial exhibition
5concepts and feasibility,

(c) expenditure on the ordinary running of the exhibition (for
instance, invigilation and the maintenance of exhibits),

(d) expenditure in relation to any live performance,

(e) expenditure on further development of the exhibition during
10the running stage,

(f) expenditure on purchasing the exhibits, and

(g) expenditure on infrastructure, unless that expenditure is
incurred solely for the purposes of the exhibition.

Additional deduction

1218ZCE 15 Claim for additional deduction

(1) A company which qualifies for museums and galleries exhibition tax
relief in relation to the production of an exhibition may claim an
additional deduction in relation to the production.

(2) A claim under subsection (1) is made with respect to an accounting
20period.

(3) Where a company has made a claim, the company is entitled to make
an additional deduction, in accordance with section 1218ZCF, in
calculating the profit or loss of the separate exhibition trade for the
accounting period concerned.

(4) 25Where the company tax return in which a claim is made is for an
accounting period later than that in which the company begins to
carry on the separate exhibition trade, the company must make any
amendments of company tax returns for earlier periods that may be
necessary.

(5) 30Any amendment or assessment necessary to give effect to subsection
(4) may be made despite any limitation on the time within which an
amendment or assessment may normally be made.

1218ZCF Amount of additional deduction

(1) The amount of an additional deduction to which a company is
35entitled as a result of a claim under section 1218ZCE is calculated as
follows.

(2) For the first period of account during which the separate exhibition
trade is carried on, the amount of the additional deduction is E,
where E is—

(a) 40so much of the qualifying expenditure incurred to date as is
EEA expenditure, or

(b) if less, 80% of the total amount of qualifying expenditure
incurred to date.